Question 1

The proportion of sales volumes for various products in a multiproduct company is known as the composite mix.

Accepted Answer

A) True 
 B)False

Question 2

Select cost information for Seacrest Enterprises is as follows:  
Based on this information:

Accepted Answer

A)  Direct materials is a fixed cost and utilities expense is a mixed cost. 
B)  Utilities expense is a mixed cost and rent expense is a fixed cost. 
C)  Both direct materials and utilities expense are mixed costs. 
D)  Both direct materials and rent expense are variable costs. 
E)  Utilities expense is a mixed cost and rent expense is a variable cost. 
A)  Direct materials is a fixed cost and utilities expense is a mixed cost. 
B)  Utilities expense is a mixed cost and rent expense is a fixed cost. 
C)  Both direct materials and utilities expense are mixed costs. 
D)  Both direct materials and rent expense are variable costs. 
E)  Utilities expense is a mixed cost and rent expense is a variable cost.

Question 3

A cost-volume-profit chart is also known as a(n)

Accepted Answer

A)  Break-even chart. 
B)  Operating profit chart. 
C)  Sales chart. 
D)  Operating leverage chart. 
E)  Margin of safety chart. 
A)  Break-even chart. 
B)  Operating profit chart. 
C)  Sales chart. 
D)  Operating leverage chart. 
E)  Margin of safety chart.

Question 4

Cost-volume-profit analysis is a predictive tool for determining the profit consequences of future cost changes, price changes, and volume of activity changes.

Accepted Answer

A) True 
 B)False

Question 5

Define the break-even point of a company.

Accepted Answer

The break-even point of a company is the

Question 6

Cost-volume-profit analysis is used to predict future costs to be incurred, volumes of activity, sales to be made, and profit to be earned.

Accepted Answer

A) True 
 B)False

Question 7

Flannigan Company manufactures and sells a single product that sells for $450 per unit; variable costs are $270. Annual fixed costs are $800,000. Current sales volume is $4,200,000.
- Compute the contribution margin ratio.

Accepted Answer

A)  40.0%. 
B)  50.0%. 
C)  19.3%. 
D)  20.7%. 
E)  66.7%. 
A)  40.0%. 
B)  50.0%. 
C)  19.3%. 
D)  20.7%. 
E)  66.7%.

Question 8

Glover Headgear produces specialty logo baseball caps for a variety of customers. Selected cost data for Glover follows: direct materials cost $8,000; sales commissions, $9,000; depreciation on factory equipment, $21,000; factory labor, $16,000; factory lease, $24,000. If Glover sells 6,100 caps at an average price of $12 for each cap, what is the company's contribution margin in total dollars?

Accepted Answer

None

Question 9

McCoy Brothers manufactures and sells two products, A and Z in the ratio of 4:2. Product A sells for $75; Z sells for $95. Variable costs for product A are $35; for Z $40. Fixed costs are $418,500.
- Compute the number of units of Product Z McCoy must sell to break even.

Accepted Answer

A)  1,350. 
B)  6,200. 
C)  10,463. 
D)  6,750. 
E)  3,100. 
A)  1,350. 
B)  6,200. 
C)  10,463. 
D)  6,750. 
E)  3,100.

Question 10

A firm provides the following sales data:
$\begin{array} { l r r r } 
\text { Expected unit sales.. } & 5,000 & \text { Unit variable cost..... } & \$ 10 \
\text { Unit selling price... } & \$ 16 & \text { Total fixed cost....... } & \$ 12,000
\end{array}$
Required:
(a) Calculate the break-even point in dollar sales.
(b) Calculate the margin of safety in dollar sales.

Accepted Answer

(a) Contribution margin ratio

Question 11

The contribution margin ratio:

Accepted Answer

A)  Cannot be used in conjunction with other analytical tools. 
B)  Is the same as the unit contribution margin. 
C)  Is the percent of each sales dollar that remains after deducting the total unit variable cost. 
D)  Is the percent of each sales dollar that remains to cover the variable and fixed costs. 
E)  Is the percent of each sales dollar that remains after deducting the total unit fixed cost. 
A)  Cannot be used in conjunction with other analytical tools. 
B)  Is the same as the unit contribution margin. 
C)  Is the percent of each sales dollar that remains after deducting the total unit variable cost. 
D)  Is the percent of each sales dollar that remains to cover the variable and fixed costs. 
E)  Is the percent of each sales dollar that remains after deducting the total unit fixed cost.

Question 12

Proctor Company has fixed costs of $315,000 and a contribution margin ratio of 24%. If sales are expected to be $1,500,000, what is the percentage of the margin of safety?

Accepted Answer

Break-even point in dollars sa

Question 13

During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pretax income was $400,000. 
-What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question?

Accepted Answer

A)  $1,100,000. 
B)  $2,800,000. 
C)  $1,300,000. 
D)  $1,900,000. 
E)  $1,700,000. 
A)  $1,100,000. 
B)  $2,800,000. 
C)  $1,300,000. 
D)  $1,900,000. 
E)  $1,700,000.

Question 14

Total fixed costs change in proportion to changes in volume of activity.

Accepted Answer

A) True 
 B)False

Question 15

The following data relate to a product sold by Hallstone Company:
 $$\begin{array} { | l | l | } 
\hline \text { Total Variable costs } & \$ 90,000 \
\hline \text { Total fixed costs } & \$ 27,000 \
\hline \text { Predicted pre-tax income } & \$ 18,000 \
\hline \text { Contribution margin per unit } & \$ 5.00 \
\hline
\end{array}$$ (a) Calculate the number of units expected to be sold.
(b) Calculate the expected total dollar sales.

Accepted Answer

(a) ($27,000 + 18,000)/$5 = 9,000 units

Question 16

Maroon Company's contribution margin ratio is 24%. Total fixed costs are $84,000. What is Maroon's break-even point in sales dollars?

Accepted Answer

A)  $84,000. 
B)  $20,160. 
C)  $240,000. 
D)  $350,000. 
E)  $110,526. 
A)  $84,000. 
B)  $20,160. 
C)  $240,000. 
D)  $350,000. 
E)  $110,526.

Question 17

Flannigan Company manufactures and sells a single product that sells for $450 per unit; variable costs are $270. Annual fixed costs are $800,000. Current sales volume is $4,200,000. 
-Compute the break-even point in units.

Accepted Answer

A)  2,900. 
B)  1,160. 
C)  1,933. 
D)  5,500. 
E)  4,444. 
A)  2,900. 
B)  1,160. 
C)  1,933. 
D)  5,500. 
E)  4,444.

Question 18

To calculate the break-even point in units, one must know unit fixed cost, unit variable cost, and sales price.

Accepted Answer

A) True 
 B)False

Question 19

To determine the slope of the variable cost from a scatter diagram, divide the change in units by the change in cost.

Accepted Answer

A) True 
 B)False

Question 20

Dubashi Windows manufactures two standard size windows, J and R, in the ratio of 5:3. J has a selling price of $150 and R has a selling price of $200. The variable cost of J is $75.00 and the variable cost of R is $90.00. Fixed costs are $352,500. Compute the (a) contribution margin per composite unit, (b) break-even point in composite units, (c) number of units of each product that will be sold at the break-even point.

Accepted Answer

(a)
 @#IMG-DLM&
(b)$352,500 / $705 = 500

Exam 21: Cost-Volume-Profit Analysis

The proportion of sales volumes for various products in a multiproduct company is known as the composite mix.

Select cost information for Seacrest Enterprises is as follows: Based on this information:

A cost-volume-profit chart is also known as a(n)

Cost-volume-profit analysis is a predictive tool for determining the profit consequences of future cost changes, price changes, and volume of activity changes.

Define the break-even point of a company.

Cost-volume-profit analysis is used to predict future costs to be incurred, volumes of activity, sales to be made, and profit to be earned.

Flannigan Company manufactures and sells a single product that sells for $450 per unit; variable costs are $270. Annual fixed costs are $800,000. Current sales volume is $4,200,000. - Compute the contribution margin ratio.

McCoy Brothers manufactures and sells two products, A and Z in the ratio of 4:2. Product A sells for $75; Z sells for $95. Variable costs for product A are $35; for Z $40. Fixed costs are $418,500. - Compute the number of units of Product Z McCoy must sell to break even.

A firm provides the following sales data: Expected unit sales.. 5,000 Unit variable cost..... \ 10 Unit selling price... \ 16 Total fixed cost....... \ 12,000 Required: (a) Calculate the break-even point in dollar sales. (b) Calculate the margin of safety in dollar sales.

The contribution margin ratio:

Proctor Company has fixed costs of $315,000 and a contribution margin ratio of 24%. If sales are expected to be $1,500,000, what is the percentage of the margin of safety?

During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pretax income was $400,000. -What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question?

Total fixed costs change in proportion to changes in volume of activity.

The following data relate to a product sold by Hallstone Company: Total Variable costs \ 90,000 Total fixed costs \ 27,000 Predicted pre-tax income \ 18,000 Contribution margin per unit \ 5.00 (a) Calculate the number of units expected to be sold. (b) Calculate the expected total dollar sales.

Maroon Company's contribution margin ratio is 24%. Total fixed costs are $84,000. What is Maroon's break-even point in sales dollars?

Flannigan Company manufactures and sells a single product that sells for $450 per unit; variable costs are $270. Annual fixed costs are $800,000. Current sales volume is $4,200,000. -Compute the break-even point in units.

To calculate the break-even point in units, one must know unit fixed cost, unit variable cost, and sales price.

To determine the slope of the variable cost from a scatter diagram, divide the change in units by the change in cost.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

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